Are you looking to buy a home soon, but aren’t sure if you should buy now or wait? With the rising costs associated with buying a home, it’s a no-brainer that you shouldn’t wait long to put in that offer. Here are some major reasons why you should buy a home now, in 2013, instead of waiting for 2014.
Interest Rates are Rising
One problem with historically low interest rates is that they have nowhere to go but up. At the beginning of June, that’s exactly what started happening. Ben Bernanke, the chairman of the Federal Reserve, announced then that he may begin to slow the government’s QE3 program. This is the Federal Reserve’s program of buying back mortgage backed security and treasuries from the banks in order to encourage the banks to lower interest rates and stimulate the economy. Immediately after the announcement, there was a sharp rise in mortgage interest rates, all the way up to a full percentage. Bernanke has since backed off the statement, and interest rates have slightly settled, but the program will end, and 2014 is the probably time from for that to happen. When the qe3 program does end, rates will likely shoot to the 6% range.
Home Prices are Rising
Interest rates aren’t the only thing rising. In May 2013, home values across the U.S. were up approximately 12.1% from May 2012. With interest rates and home rates rising, it indicates that action is needed to buy a home before they rise anymore. Every time an interest rate rises just 1%, it means 10% less buying power. That means that if home prices rise 10% and rates go up by 1% within the next year, your buying power decreases by 20%! That is a significant chunk of change that could go towards a bigger home now instead of interest rates later.
Right now, homes are still affordable. The housing affordability index, put out by the National Association of Realtors, is based on the relationship between median home price, median family income, and average mortgage interest rate. In January 2013, the index hit a high with a composite number of 210.7. That means that a family earning the median national income makes more than twice what is necessary to qualify for the same home. However, you should know that the affordability index is sliding. In May, the last figures posted were 172, which is 38 points lower than the points posted in January. This means that houses may get less affordable the longer that you wait.
Guard Yourself against Inflation
If you could pay today’s prices for eggs, gas, and milk for the next 30 years, would you do it? Of course you would! Prices are only rising, and inflation leaves you with less buying power. A 30 year fixed rate mortgage works the same way. It guards you from inflated interest rates and prices.
When you’re ready to begin your home buying process, or if you would just like more information, contact Jillian Batchelor of The Batchelor Group today at 702-823-3801, or visit us online at www.lasvegas1realestate.com. Hurry before the numbers start to rise!